The financial-sector hurdles that arise from the disconnect between state decriminalization and the list of federal Schedule 1 substances have stymied owners of marijuana-related businesses across the state.

News stories feature anecdotes of hapless people struggling with how to maintain a bank account, taking credit cards or facing eviction because their landlord couldn’t refinance a loan.

Fisher — who owns Rocky Mountain Remedies with his business partner, Ryan Fisher — presents his solutions so matter of factly that the obstacles fade into routine business rather than pioneering a market with looming federal consequences.

Rocky Mountain Remedies has been accepting credit cards for far longer than retail sales have been available or that the issue of the cash-intensive nature of most retail dispensaries has been of mainstream concern.

The business has a federally-insured bank account with an institution, which Fisher declined to name, that knows what Rocky Mountain Remedies sells.

There have been recent reports of Colorado landlords being unable to refinance loans on commercial properties that house marijuana-related businesses because banks fear the collateral could be seized by the federal government.

Rocky Mountain Remedies has retail, medical, cultivation and infused product manufacturing operations in multiple locations in Steamboat, but all of them are wholly owned, eliminating the concern of financing.

“We don’t ever believe in lying,” Fisher said.

That said, medical marijuana is a health care service. And when you’re looking for financial services, that is an accurate description of the business.

Now, as the industry has grown, Rocky Mountain Remedies has been approached by merchant services companies that are open about catering to marijuana-related businesses.

“We pay a little bit more in fees,” Fisher said.

But what’s that when Colorado Gov. John Hickenlooper is predicting that marijuana sales will add more than $100 million to state coffers this next fiscal year, meaning total sales could reach $1 billion?

Retail sales at Rocky Mountain Remedies were at the high end of what the owners prepared for, Fisher said.

“We planned for that situation product-wise,” he said. “I’m not a cynic, but I'm conservative.”

Rocky Mountain Remedies is planning expansion of its cultivation operations, and its infused product manufacturing will take over the space that was used by its previous medical storefront.

Fisher also is expanding into Massachusetts, taking the position of executive director and chief operating officer for nonprofit New England Treatment Access Inc. That venture is being underwritten by a family with experience in the financial sector.

Various private funds have begun raising capital to invest in marijuana-related businesses that might not be able to access traditional financial markets.

“None of them are super well funded at this point,” Fisher said, but there is plenty of private money out there.

Instead of stomaching the steep interest rates of private equity, he said, he’d rather be in business with an individual investor with deep pockets.

But Rocky Mountain Remedies is at a point where Fisher said he didn’t foresee the need to court outside funds.

The recent guidance offered to the banking industry by the Treasury Department and the Justice Department doesn’t help anything, Fisher said, and won’t make banks more willing to work with marijuana-related businesses.

“Instead, it reiterates reasons for prosecution and is simply a modified reporting system for banks to use,” the release states. “It imposes a heavy burden on them to know and control their customers’ activities, and those of their customers. No bank can comply.”

“You have a state that has said ‘Yes’ but those that actually enforce have said ‘No,’” said PJ Wharton, president and CEO of Yampa Valley Bank. “From our perspective, it put all the onus on the bank to act as a policing agent.”

Banks can be regulated by multiple federal agencies in addition to state agencies. The recent federal guidance, Wharton said, states that banks can have customers with marijuana-related businesses but they should be prepared to face the consequences of doing so.

“What we’re looking for is safety from our regulators who say ‘We’re a national regulator, and we don't care what the state said,’” he said. “If I had a client that was in existence beforehand long before, we would consider it on a case-by-case basis, but to accept a new customer, we’re effectively still prohibited.

“It’s not a fair situation for the bank or for customers.”

Robert Kauffmann, manager of First National Bank of the Rockies in Steamboat, said that the guidance he’s received is to not take accounts from marijuana-related businesses.

“When the medical marijuana business first started up in the Steamboat area, we did have some accounts,” Kauffmann said. “Then our legal team advised us that we should not do that, so we discontinued the accounts with medical marijuana businesses.”

Nothing has changed since then, and Kauffmann cited the Colorado Bankers Association statement as reinforcing that view.

The Colorado Bankers Association stated that the solution is to move forward with legislation such as what’s been proposed by U.S. Rep. Ed Perlmutter, D-Arvada, in H.R. 2652. Perlmutter’s Marijuana Businesses Access to Banking Act hasn’t seen any action since September.

Of the two other marijuana dispensaries in Steamboat, Natural Choice remains a cash-only business, but Golden Leaf does accept credit cards. Golden Leaf has faced setbacks to obtaining a retail license from the city but will be back before the marijuana licensing authority March 4.

Joshua Scruggs, part owner of Golden Leaf, said the business does have a bank account and merchant services. Like Rocky Mountain Remedies, Golden Leaf’s location is wholly owned.

Other dispensaries have obtained merchant services under personal names rather than business names and sometimes operate without business bank accounts. Some dispensary owners did not want to talk on the record about specific setups for fear it could jeopardize their relationships with financial institutions or service providers.

Medical marijuana now is legal in 20 states, and 13 more have introduced medical marijuana legislation in this session.

As medical marijuana spreads through legislation or ballot measure and the idea of full legalization makes headway, the pressure for federally-sanctioned financial services is only going to increase.

Comments

For the Feds to classify Marijuana as a Schedule I drug the same as heroin and LSD , among others, is due to politicians who have NO idea of what they do and know (little surprise there) and pure "reefer madness". There is NO scientific basis for this classification. If the classification is based upon no medicinal value then this is obviously wrong. And, if it is, then why not reclassify alcohol and or nicotine?
The DEA and the liquor industry have a vested interest in keeping marijuana classified as a Schedule I drug. Profits and jobs are at stake. But hold on, "...for the times they are a changin'". To reclassify will happen, it's purely a matter of time. Not if, but when.

They (meaning the mj businesses) can run there money through my house painting business account for a small fee. i just have to start a house painting business. How do you think the so called "mob" laundried (sp) washed their money.

You are stating the mob is using your business to launder their money?

Retail MJ businesses do not need to launder their money because it is legal. If I was the owner of a small bank like FNBR then I'd be asking my lawyers to figure out how to follow the federal rules because I would not ignore a billion dollar business.

MJ is projected to be larger this year than legal gambling in Colorado.

I think this country's mj policy has been an expensive disaster costing money, putting people in jail and harming the environment via illegal grows while not limiting supply for a drug far less harmful than alcohol or tobacco.

Scott, The MJ business is not legal according to Federal law, which trumps State law My personal opinion is that it should be legal but my opinion has no legal authority. Federal banking laws and requirements present a real problem to the MJ industry and asking attorneys to find a way to make an illegal activity legal presents an even larger problem. As an example, if medical mj reseipts can be declared legal and retail illegal, one would need two separate accounting procedures, wouldn't one ? Until there are changes in the law, I believe it will be a mess. What are your specific ideas to resolve the mj banking dilemna ? One which is acceptable to the banking industry.

Oz Following that line of logic, Heroin is the most dangerous illegal drug so we should legalize everything else and let the good times roll. They all destroy lives and kill people, especially alcohol and tobacco. Make more of them legal and you get more destroyed lives and dead people. I know you do not believe me but go visit people in jail and prisons. 99% of them are under the influence of something when they commit their crimes which are in addition to the crime of being under the influence.

Federal law does not simply "trump" state law. Federal government has the right to regulate "interstate commerce". The Supreme Court has ruled that commerce within a state that can easily be transported across state lines affects interstate commerce as it affects supply and hence pricing.

Colorado's medical and retail regulatory framework is a new idea of making something legal within a state that is illegal to transport across state lines. The state regulations monitor production, transportation and the legal sales within the state. Thus, allowing Colorado to make the argument that all of the legal activity is occurring within state lines.

This sort of intrastate commerce is somewhat comparable to casino gambling in Nevada and other states in that it is a state regulating an activity that occurs purely within state lines while any online internet gambling would fall under federal legislation. And the banking system is willing to provide banking services to the state licensed casinos even as they'd be obligated to report the cash deposit if the bank thinks it is from illegal gambling..

Colorado's mj laws being intrastate commerce have not been challenged by the feds. Feds could have busted any dispensary or retail mj as violating federal drug laws. The legal danger for the federal government is that if they lost in court then there is a validated legal framework on how a state can avoid federal regulations regarding commerce.

Heroin is generally medically considered to be more harmful and addictive than alcohol or tobacco. Heroin is also not considered as commonly available. Thus, prohibition of heroin has not totally failed as it has with marijuana.

Ron Paul has made the point that the reason he doesn't use heroin isn't because it is illegal. That the reason he doesn't use it is because he doesn't want to use it.

There is the related point of how many people with substance abuse issues because of availability of the substance vs how many have personal issues and are going to get addicted to whatever is available?

Since MJ is less harmful than alcohol then there is the potential to reduce the harm to the addictive person by moving the addictive substance from alcohol to mj.

Rhys Long time no talk. 86 here today. Broncos Draft for defense although the defense played much better than the offense. Nuggets Bring back George Karl. Rather go to the playoffs and lose than become a sub 500 team. Maybe they can resign Carmelo. Wouldn't that be a hoot? Know you do not care about hockey but Avalanche are so close to being relevant again. More fun to talk sports than this other garbage.

Jerry -- Yeah I've missed yakking sports too; these forums are stale, everybody banging the same old drums, nobody offering anything new... then I've been way busy at work, serving the upper class... then chasing the party all over town, hindering other pursuits, and causing me to swear off drinking, at least momentarily -- not chasing parties, just drinking. It feels so much better, like now.

My TV hasn't worked for a couple of months; I got bounced around a bit at the domicile, while the landlord did some work on the place -- an ongoing project -- I'm a bubble in the wind, but it's cheap. Thenceforth, I have seen little sports, except Olympics out and about.

The Broncos need a pass rush. "Prevent" just prevents you from winning. Their guy has all day to pick us apart; even Champ is getting burned. Peyton can rack 'em up; the essence of the problem is, the other guys just score more. I agree, draft for defense.

Nuggets -- Who cares? I hope the new guy doesn't last the season and they bring George back -- Andre Miller too, the heart and soul of the team, Mr. Assist. Javale on the bench hasn't helped. Maybe that giraffe, much like a chicken stuffed with hormones, has outgrown his structure's ability to keep up. That bird won't fly, not for long anyway.

Now I've finally got a sunny day off, no hangover... very soon I'm going to see if my old long skinny Rossi Vipers remember how to turn, after they go straight for a while first. Cheers!!

PS -- 86 eh? Yeah I remember winters I got stuck in AZ -- nice enough days, shirt-sleeve weather, good for cruising the malls, golfing if you can afford it -- I couldn't.

Yet the sun hangs low in the sky, the shadows are long; it's winter to them and you. When it gets down to 50 they bitch "F##k this; I moved here to get AWAY from this s##t." Outdoor activities are largely forgotten; the lakes and rivers stay empty of humans. The nice weather gets BORING.

I'll never forget the winter I was stuck down there, my software in its first failed version, me a duck out of water, so missing my 'Boat. Then the then-Clermont Inn needed some IT work and fronted me a room; I gladly cruised back... somehow found myself by the Buddy statue, tapped his head with my poles... then a few seconds later, my forehead was throbbing in pain; I hadn't worn the proper headgear... and I shouted